Do Graduates Earn More Money?

Richard
Insight & Opinion

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Students have grabbed the headlines in recent months with their view on tuition fees. With this in mind I wanted to take a quick objective look at the true cost of a University degree and the affects of future earnings in the employment market…

First things first, people who go to university and qualify with a degree will earn more money per annum than those that don’t go or drop out (according to research by the ONS). So let’s look at the difference in earnings between graduates and non-graduates (we are talking averages here and are not being sector specific). The average salary for a 21-34 year old educated to A-Level standard in the UK currently stands at £21,869. Apply this to those educated to degree level and the number stands at £28,221. That is a 35% increase, a significant difference. However…

There are other things to consider, non graduates have a three year head start in the employment market, benefiting from earnings and real world commercial experience. Graduates on the other hand join the employment market with a student loan of £20,000 upwards. At this early stage in the career path non graduates could see a swing of £50k+ in their favour, again, a significant difference.

But from this point onwards the earning potential seems to favour those educated to degree level, who on average, will earn nearly £45k more between the ages of 21-33 than their non degree educated counterparts, generally enough to cover the student loan (which on average takes 12 years to pay off) and catch up on the 3 years of lost earnings. In fact, over the span of a complete career a degree educated person will earn, on average, £160,000 more or the equivalent to 145,454 Pot Noodles. Students win through.

But, one final thing, not everyone sticks with university and those that don’t complete their degrees experience the worst of both worlds, lost earnings and tuition fees. Of all students that enrol in a university course 20% will drop out completely and from the remaining students only 66% will end up utilising their tuition within a graduate role. This means that over 50% of all university admissions do not benefit from the education they paid for.

At the end of the day future earnings are just a very, very small part of why people go to university, however those that will benefit the most (both professionally and financially) will have clear direction, choose a career path they want and see it through, oh and won’t drop out.